NuStar and other companies are building docks, storage tanks and other facilities in Corpus Christi to take advantage of the oil boom in the Eagle Ford shale 100 miles away. The port shipped out 350,000 bpd of crude in November, up from under 10,000 at the start of 2012, according to port data.

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By DAN MURTAUGH

Bloomberg

Americas newest energy hub just got a little busier.

NuStar Energy LP officially opened its third petroleum dock
at the Port of Corpus Christi, Texas, yesterday as Chairman
Bill Greehey smashed a bottle of champagne against a loading
arm that was filling a barge with crude.

NuStar and other companies are building docks, storage tanks
and other facilities in Corpus Christi to
take advantage of the oil boom in the Eagle Ford shale
formation 100 miles away. The port shipped out 350,000 bpd of
crude in November, up from under 10,000 at the start of 2012,
according to port data.

Its a historic time right now for our port,
said Frank Brogan, managing director for the citys port
authority. Ive been here 27 years, and weve
had more activity in the last two years than in the previous
25 combined.

The new activity is putting pressure on the ports
infrastructure. When tankers used to leave the port empty,
they could pass full incoming tankers without a problem. Now
only one tanker is allowed to travel the ship channel at a
time. Pilots are also restricted to daylight operations.
Without the restrictions the port could move up to 30% more
cargo, Brogan said.

The port authority is trying to gather funding to both widen
the 45-foot-deep channel, which would allow tankers to pass
again, and to deepen it to 52 feet to allow larger vessels as
the Panama Canal expansion nears completion.

Had you asked the port managers of Corpus Christi five
to 10 years ago whether theyd be expanding
infrastructure, they would have said no, said Andrew
Lebow, a senior vice president at Jefferies Bache in New
York. No one foresaw that domestic production,
especially Texas production, would increase like it has. In
terms of infrastructure, the industry has had to
scramble.

NuStars new dock doubles the companys loading
capacity there to 30,000 bbl/hour, said Greg Matula, a San
Antonio-based spokesman. The docks are connected to
NuStars 1.6 million-bbl storage terminal, which is fed
by two of the companys pipelines bringing crude from
the Eagle Ford.

About 80% of the crude loaded on vessels in Corpus Christi
goes to ports in Texas and Louisiana, Brad Barron,
NuStars chief executive officer, said in an interview
in Corpus Christi. The rest goes to refineries on the East
Coasts of the US and Canada.

Eagle Ford

The Eagle Ford is a long, narrow strip of underground rock in
South Texas rich in oil and gas that was too difficult to
recover until recently. Higher crude prices and advances in
horizontal drilling and hydraulic fracturing helped increase
the formations output to 1.36 million bpd of crude and
condensate this month, more than 20 times the 55,000 bbl
produced at the start of 2010, according to data from the
Energy Information Administration.

The Eagle Fords proved tight oil reserves increased to
3.372 billion bbl in 2012 from 1.251 billion in 2011, the EIA
said in a report. That makes it the largest tight oil play in
the US, surpassing the Bakken in North Dakota.

When Eagle Ford production first began growing, it was bad
for the port, Brogan said. Corpus Christi has three major
refineries than can produce 775,000 bpd of oil products, and
most of their crude and feedstock came through the port.
The refineries reduced their imports as they began to run
more Eagle Ford crude.

Light Crude

Oil from the Eagle Ford is very low in density and sulfur.
Two of the three refineries are designed to process thick,
high-sulfur crude, so they were limited in the amount of
Eagle Ford oil they could use. Thats when the port
began expanding in earnest, Brogan said.

The enormous amount of crude coming out of the ground
overloaded our refineries, consumed all available dock
capacity and kicked off a huge wave of new dock construction at the port, just
like the NuStar facility, he said.

About $22 billion in construction is moving forward on
the port, Brogan said. Waterfront land has tripled in price
to about $300,000 an acre. Port industries employ 7,000
people, and 5,000 to 10,000 more are doing construction work on new projects.

Its a challenge for employers to find
good-quality people, Brogan said. Theres no
shortage of jobs.

Energy Hub

More investment is coming. Cheniere Energy is building a
liquefied natural gas export plant in Corpus Christi.
Companies including Magellan Midstream Partners and Castleton
Commodities International have announced plans for condensate
splitters, which would process ultra-light oil from the Eagle
Ford.

Theres a huge refinery complex here, refined
products pipelines, massive amounts of crude coming in and
out, Barron said. Outside of Houston, Corpus
Christi is the most important energy hub in the US.

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